Horse Chestnuts and Chestnut Horses

I don’t have any idea who Katrina Arabe is – probably just a news writer who writes whatever people tell her without claiming any particular expertise in the subject of her writing. I don’t know what Industrial Trends is either or who reads it, except for the fact that it is where Katrina does some of her writing. As a result, a quote from Katrina about lean manufacturing in Industrial Trends hardly qualifies as a high impact story. But she wrote something so absurd, so outrageous, and so ridiculous that I have held onto it.

"Lean manufacturing is in while vertical integration is out. That’s why companies are outsourcing manufacturing – to stay focused and profitable," says Katrina.

There you have it. All of these plant closings and mass layoffs, shipping work off to places you can’t find on most globes – it’s all the result of lean manufacturing. The significance of the quote is not Katrina’s opinion. Rather, it is that she has described quite well the mentality of the titans of industry that are in charge of so many big companies.

I can very easily envision a room full of MBAs and CPAs at some plush corporate headquarters working with some high priced consultant on a grand Value Stream Mapping exercise; and coming to the conclusion that nobody outside their klan of wizards at headquarters really adds value, so it all has to go. Since manufacturing is work for simple minded folks, it might just as well be done by cheap, simple minded Asians as expensive simple minded Americans.

When I read the Arabe quote, I was immediately reminded of an Abraham Lincoln quote, in which he accused his opponent in the Lincoln-Douglas debates of having used "a specious and fantastic arrangement of words, by which a man can prove a horse-chestnut to be a chestnut horse."

I think it takes just such a specious and fantastic arrangement of words to determine that lean manufacturing is a strategy whereby companies can justify getting out of the manufacturing end of their business. General Electric, for example, has seen wisdom in Katrina’s words and has undergone just such a lean transformation.

Now comes Merck – the big pharmaceutical company. They have announced to the world that they are going to toss 7,000 of their employees out and close five plants. Which plants and which employees are yet to be determined, but since they are "introducing a new production system based on lean manufacturing principles", they are sure there will be no problem lining up candidates.

Some of it is going to come directly from the Katrina Arabe lean strategy, as well. According to the Merck press release, "the Company will also enhance its relationships with key external suppliers to leverage cost efficiencies while allowing it to focus internal manufacturing resources on core activities that provide competitive advantage for Merck" – for those of you who do not speak corporate gibberish fluently, that means they are going to outsource a big chunk of their manufacturing to their suppliers. You know – lean is in so vertical integration is out.

Healthcare in the United States is fraught with all sorts of problems – trial lawyers, the FDA, ethical questions and so forth. I can’t do much of anything about those matters. What I can do, however, is point out worn out irresponsible and lousy manufacturing management, even when Merck and Katrina Arabe try to disguise it as lean manufacturing. I just wish they would be honest about it instead of disguising it in a manner that can only give lean manufacturing a bad reputation.

Comments

Most business writers are amazingly clueless when it comes to business. They’re far too gullible when it comes to believing what people at companies tell them. Business journalists who can actually dig into something and think critically are rare, although you find them at some of the better publications. Cream rises to the top, in that field, mostly.

I monitor news on lean with Google and Yahoo alerts, so frequently read articles in newspapers dispersed around the US and the rest of the world, in search of stuff for Lean Directions. The widespread idiocy in the business press is dismaying.

I knew a reporter for a newspaper in Austin who actually understood Dell and their operations very well. He reached out to people to learn and wrote well informed articles (and kept the company line BS to a minimum). Was he smarter than other reporters? Maybe he just cared more and was cynical enough to not believe everything some PR person told him.

Every couple weeks our local paper has an in-depth article on a local business. Several times it has been on local manufacturing businesses that have a great PR department, but I happen to know ops guys inside. The stories are always different… and one even went out of business a couple weeks after a glowing article. The reporter obviously talks to the top execs but does no investigation. And I really start to pound my head against the wall when one company, which does contract simple connector/harness assembly using components with a max 2 day lead time, BOASTS about its “rapidly growing inventory of stock components to provide less than one week turnaround”. If I had the bucks I’d buy that company, slash that inventory by 90%, and put a couple million in my pocket. Of course that’s the same company where the owner/president has a switch under his desk to turn on the sprinkler system when he sees customers or vendors that he doesn’t like (yes, including customers) coming up the walkway.